NEW YORK, Aug. 5, 2015 /PRNewswire/ -- Morgans Hotel
Group Co. (NASDAQ: MHGC) (the "Company") today reported financial
results for the quarter ended June
30, 2015.
Second Quarter Highlights
- Adjusted EBITDA was $12.6 million
in the second quarter of 2015 as compared to $16.8 million for the same period in
2014.
- Excluding The Light Group ("TLG"), which was sold in
January 2015, Adjusted EBITDA was
$12.5 million for the second quarter
of 2015, a decrease of $1.9 million,
or 13.0%, from the same period in 2014.
- Revenue per available room ("RevPAR") for System-Wide
Comparable Hotels decreased by 5.7% during the second quarter of
2015 as compared to the second quarter of 2014. System-Wide
Comparable Hotels' room revenues plus resort fees, implemented at
certain hotels in the second half of 2014, decreased 2.2% during
the second quarter of 2015 as compared to the same period in
2014.
- Total hotel operating expenses at the Company's Owned Hotels
and leased food and beverage operations decreased $0.8 million, or 2.0%, primarily due to focused
and ongoing cost control efforts in hotel general and
administrative expenses.
- In May 2015, the Company signed a
long-term management agreement for Mondrian Dubai which is
currently expected to open in 2018 and will be the Company's fifth
Mondrian hotel.
Second Quarter 2015 Operating Results
Adjusted EBITDA, defined below, for the second quarter of
2015 was $12.6 million compared to
$16.8 million for the same period in
2014. Excluding TLG, Adjusted EBITDA was $12.5 million for the second quarter of 2015, a
decrease of $1.9 million, or 13.0%,
from the same period in 2014.
RevPAR at System-Wide Comparable Hotels decreased by 5.7% in the
second quarter of 2015 as compared to the same period in 2014, due
to a 1.1% decrease in occupancy and a 4.6% decrease in average
daily rate ("ADR"). System-Wide Comparable Hotels' room
revenues plus resort fees, implemented at certain hotels in the
second half of 2014, decreased 2.2% during the second quarter of
2015 as compared to the same period in 2014. Revenues
declined due to increased supply in New
York and Miami, as well as
the stronger U.S. dollar which has negatively impacted leisure
demand in the United States and
resulted in lower ADR.
RevPAR from System-Wide Comparable Hotels in New York decreased 9.8% for the quarter ended
June 30, 2015 as compared to the same
period in 2014, due to an 8.7% decrease in ADR and a 1.2% decrease
in occupancy. RevPAR at Hudson decreased by 9.7% during the second
quarter of 2015 as compared to the same period in 2014, driven
primarily by a 9.3% ADR decrease. Hudson's room revenues plus resort fees
decreased by 4.1% during the second quarter of 2015 as compared to
the same period in 2014.
RevPAR from System-Wide Comparable Hotels in Miami decreased 5.7% in the second quarter of
2015 as compared to the second quarter of 2014. Delano South Beach experienced a RevPAR decrease
of 8.9% during the second quarter of 2015 as compared to the same
period in 2014. Delano's room revenues plus resort fees
decreased 3.8% in the second quarter of 2015 as compared to the
same period in 2014.
The Company's System-Wide Comparable Hotels on the West Coast
generated 2.4% RevPAR growth in the second quarter of 2015 as
compared to 2014, driven by Mondrian Los Angeles. Although
Clift's RevPAR was flat in the second quarter of 2015 as compared
to the same period in 2014, EBITDA increased 14.6% due primarily to
cost saving initiatives.
The Company's managed hotels in London are non-comparable between 2015 and
2014 due to a major renovation of Sanderson and St Martins Lanes' guestrooms in
2014 and 2015, which are now complete, as well as the opening of
Mondrian London on September 30,
2014.
Excluding TLG, management fees increased $0.2 million, or 7.0%, during the second quarter
of 2015 as compared to the same period in 2014, primarily due to
the addition of Mondrian London, Delano Las Vegas and 10 Karaköy,
which was partially offset by the termination of the Mondrian SoHo
management agreement in April 2015.
Despite relatively flat occupancy, total hotel operating
expenses at the Company's Owned Hotels and leased food and beverage
operations decreased $0.8 million, or
2.0%, primarily due to focused and ongoing cost control efforts in
hotel general and administrative expenses.
Excluding TLG, corporate expenses, excluding stock compensation
expense, decreased $0.5 million, or
10.3%, during the second quarter of 2015 as compared to the same
period in 2014, due primarily to the Company's continuing efforts
to manage overhead.
Interest expense decreased by $1.0
million, or 7.6%, during the second quarter of 2015 as
compared to the same period in 2014, primarily due to the
elimination of interest expense related to the Company's
convertible notes, which were repaid in October 2014.
The Company recorded a net loss of $6.6
million in the second quarter of 2015 compared to a net loss
of $9.7 million in the second quarter
of 2014, primarily as a result of increased operating income and
lower interest expense.
Balance Sheet
The Company's total consolidated debt at June 30, 2015 was $606.0
million, which included $100.7
million of capital lease obligations related primarily to
Clift.
At June 30, 2015, the Company had
approximately $33.0 million in cash
and cash equivalents and $13.4
million in restricted cash.
As of June 30, 2015, the Company
had approximately $420.1 million of
remaining Federal tax net operating loss carryforwards to offset
future income.
Development
In May 2015, the Company signed a
long-term management agreement for Mondrian Dubai, which is
currently scheduled to open in 2018. Located in the Burj
Khalifa region of Dubai, Mondrian
Dubai is expected to have 235-rooms, of which approximately one
third are expected to be condo hotel units. There are no
capital commitments or cash flow guarantees required under this
agreement. Mondrian Dubai will
mark the Company's fifth Mondrian hotel.
The Company has signed management agreements for five hotels in
various stages of development, including two hotels under
construction consisting of Mondrian Doha, scheduled to open in late
2015, and Delano Dubai, scheduled to open in 2017.
Investor Conference Call
The Company will host a conference call to review its second
quarter 2015 results on Wednesday, August 5,
2015 at 9:00 AM Eastern time.
The call will be webcast live over the Internet and will be
accessible at www.morganshotelgroup.com under the Investors
section. Participants should follow the instructions provided on
the website for the download and installation of audio applications
necessary to join the webcast.
The call will also be accessible live over the phone by dialing
(877) 876-9175 (within the U.S.) or (785) 424-1668 (outside the
U.S.) and providing the following passcode: 1859311. A
playback of the conference call will be available beginning at
12:00 PM Eastern time, Wednesday, August 5, 2015, through August 12, 2015. To access the playback,
please dial (888) 203-1112 (within U.S.) or (719) 457-0820 (outside
U.S.) and enter passcode 1859311.
Additional Definitions
"Adjusted EBITDA" means adjusted earnings before interest,
taxes, depreciation and amortization, as further defined below.
During the third quarter of 2014, the Company changed its
definition of Adjusted EBITDA to include the operating results of
Clift, an owned hotel. Management believes the inclusion of Clift,
which is subject to a 99-year lease and accounted for as a
financing, is a more accurate depiction of the Company's operating
results and is consistent with the Company's presentation of Clift
in accordance with generally accepted accounting principles in
the United States ("U.S. GAAP").
Prior periods have been restated to include Clift's operating
results in Adjusted EBITDA.
"EBITDA" means earnings before interest, income taxes,
depreciation and amortization.
"Owned Hotels" means Hudson in
New York, Delano South Beach in Miami Beach and Clift in San Francisco, which the Company leases under
a long-term lease.
"System-Wide Comparable Hotels" means all Morgans Hotel Group
branded hotels operated by the Company, except for hotels added or
under major renovation during the current or the prior year period,
development projects and hotels no longer managed by the
Company. System-Wide Comparable Hotels for the quarters ended
June 30, 2015 and 2014 exclude
Sanderson and St Martins Lane in
London, which were both under
major renovations during 2014, Mondrian London, Delano Las Vegas
and 10 Karaköy, all of which are newly opened hotels in 2014, and
Mondrian SoHo, which the Company no longer managed effective
April 27, 2015.
About Morgans Hotel Group
Morgans Hotel Group Co. (NASDAQ: MHGC) is widely credited as the
creator of the first "boutique" hotel and a continuing leader of
the hotel industry's boutique sector. Morgans Hotel Group operates
Delano in South Beach, Mondrian in Los
Angeles, South Beach and London, Hudson in New
York, Morgans and Royalton in New
York, Clift in San
Francisco, Shore Club in South Beach and Sanderson and St Martins Lane in London.
Morgans Hotel Group has ownership interests or owns several of
these hotels. Morgans Hotel Group also licenses its brand through
Delano in Las Vegas and 10 Karakoy
in Istanbul, Turkey. Morgans
Hotel Group has other hotels in various stages of development to be
operated under management or franchise agreements, including a
Mondrian property in Doha, Qatar
and a Delano in Dubai. For more
information please visit www.morganshotelgroup.com.
Forward-Looking and Cautionary Statements
This press release may contain certain "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are generally
identifiable by use of forward-looking terminology such as "may,"
"will," "should," "potential," "intend," "expect," "endeavor,"
"seek," "anticipate," "estimate," "overestimate," "underestimate,"
"believe," "could," "project," "predict," "continue" or other
similar words or expressions. These forward-looking
statements reflect the Company's current views about future events
and are subject to risks, uncertainties, assumptions and changes in
circumstances that may cause its actual results to differ
materially from those expressed in any forward-looking statement.
Forward-looking statements in this press release include, without
limitation, statements regarding the Company's expectation related
to its ability to grow in the future and expected hotel openings
and its development efforts, including the opening of new hotels in
the future.
Important risks and factors that could cause the Company's
actual results to differ materially from those expressed in any
forward-looking statements include, but are not limited to
economic, business, competitive market and regulatory conditions
such as: a downturn in economic and market conditions, both in the
U.S. and internationally, particularly as it impacts demand for
travel, hotels, dining and entertainment; the Company's levels of
debt, its ability to refinance its current outstanding debt, repay
outstanding debt or make payments on guaranties as they may become
due, general volatility of the capital markets and the Company's
ability to access the capital markets and the ability of its joint
ventures to do the foregoing; the impact of financial and other
covenants in the Company's loan agreements and other debt
instruments that limit the Company's ability to borrow and restrict
its operations; the Company's history of losses; the Company's
ability to compete in the "boutique" or "lifestyle" hotel segments
of the hospitality industry and changes in the competitive
environment in the Company's industry and the markets where it
invests; the Company's ability to protect the value of its name,
image and brands and its intellectual property; risks related to
natural disasters, terrorist attacks, the threat of terrorist
attacks and similar disasters; risks related to the Company's
international operations, such as global economic conditions,
political or economic instability, compliance with foreign
regulations and satisfaction of international business and
workplace requirements; the Company's ability to timely fund the
renovations and capital improvements necessary to maintain its
properties at the quality of the Morgans Hotel Group and associated
brands; risks associated with the acquisition, development and
integration of properties and businesses; the risks of conducting
business through joint venture entities over which the Company may
not have full control; the Company's ability to perform under
management agreements and to resolve any disputes with owners of
properties that the Company manages but does not wholly own;
potential terminations of management agreements; the impact of any
material litigation, claims or disputes, including labor disputes;
the seasonal nature of the hospitality business and other aspects
of the hospitality industry that are beyond the Company's control;
the Company's ability to comply with complex U.S. and international
regulations, including regulations related to the environment,
labor, food and beverage operations and data privacy; the Company's
ability to maintain effective and competitive technology platforms;
ownership of a substantial block of the Company's common stock by a
small number of investors and the ability of such investors to
influence key decisions; the impact of any dividend payments or
accruals on the Company's preferred securities on its cash flow and
the value of its common stock; the impact of any strategic
alternatives considered by the Board of Directors and/or pursued by
the Company; the impact of changes in the Company's management
team, including the recent resignation of its interim chief
executive officer; and other risk factors discussed in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2014, which was filed
with the Securities and Exchange Commission (the "SEC") on
March 13, 2015, and other documents
filed by the Company with the SEC from time to time. All
forward-looking statements in this press release are made as of the
date hereof, based upon information known to management as of the
date hereof, and the Company assumes no obligations to update or
revise any of its forward-looking statements even if experience or
future changes show that indicated results or events will not be
realized.
Income
Statements
|
|
|
|
|
|
|
|
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
|
|
Six
Months
|
|
|
|
|
|
Ended June
30,
|
|
Ended June
30,
|
|
|
|
|
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
|
Revenues :
|
|
|
|
|
|
|
|
|
|
Rooms
|
|
|
|
|
$ 30,991
|
$ 33,118
|
|
$ 56,787
|
$
60,112
|
Food and
beverage
|
|
|
|
19,573
|
21,004
|
|
40,990
|
42,925
|
Other
hotel
|
|
|
|
|
2,138
|
1,308
|
|
4,223
|
2,470
|
|
Total hotel
revenues
|
|
|
|
52,702
|
55,430
|
|
102,000
|
105,507
|
Management
fee-related parties and other income
|
|
|
3,508
|
5,859
|
|
7,516
|
11,250
|
|
Total
revenues
|
|
|
|
56,210
|
61,289
|
|
109,516
|
116,757
|
|
|
|
|
|
|
|
|
|
|
Operating Costs and
Expenses :
|
|
|
|
|
|
|
|
|
Rooms
|
|
|
|
|
9,414
|
9,413
|
|
18,298
|
18,305
|
Food and
beverage
|
|
|
|
13,822
|
14,838
|
|
28,405
|
30,149
|
Other
departmental
|
|
|
|
1,129
|
797
|
|
2,219
|
1,569
|
Hotel selling,
general and administrative
|
|
|
|
10,418
|
10,769
|
|
20,570
|
22,355
|
Property taxes,
insurance and other
|
|
|
|
4,411
|
4,157
|
|
8,294
|
7,931
|
|
Total hotel operating
expenses
|
|
|
39,194
|
39,974
|
|
77,786
|
80,309
|
Corporate expenses
:
|
|
|
|
|
|
|
|
|
|
Stock based
compensation
|
|
|
578
|
804
|
|
922
|
2,748
|
|
Other
|
|
|
|
4,341
|
5,215
|
|
10,025
|
11,153
|
Depreciation and
amortization
|
|
|
|
5,563
|
6,681
|
|
11,200
|
15,083
|
Restructuring and
disposal costs
|
|
|
|
593
|
3,981
|
|
2,542
|
11,224
|
Development
costs
|
|
|
|
457
|
2,666
|
|
605
|
3,364
|
Loss on receivables
from unconsolidated joint venture
|
|
|
550
|
-
|
|
550
|
-
|
|
Total operating costs
and expenses
|
|
51,276
|
59,321
|
|
103,630
|
123,881
|
|
Operating income
(loss)
|
|
|
4,934
|
1,968
|
|
5,886
|
(7,124)
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
|
11,955
|
12,935
|
|
23,782
|
28,933
|
Impairment loss and
equity in income of unconsolidated joint ventures
|
(2)
|
(2)
|
|
3,888
|
(4)
|
Gain on asset
sales
|
|
|
|
(2,086)
|
(2,005)
|
|
(5,794)
|
(4,010)
|
Other non-operating
expenses
|
|
|
|
1,552
|
430
|
|
3,207
|
1,126
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
tax expense
|
|
|
(6,485)
|
(9,390)
|
|
(19,197)
|
(33,169)
|
|
Income tax
expense
|
|
|
|
169
|
66
|
|
295
|
229
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
|
(6,654)
|
(9,456)
|
|
(19,492)
|
(33,398)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss (income)
attributable to noncontrolling interest
|
13
|
(263)
|
|
27
|
(456)
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Morgans Hotel Group
|
$
(6,641)
|
$
(9,719)
|
|
$ (19,465)
|
$
(33,854)
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
dividends and accretion
|
|
(4,075)
|
(3,987)
|
|
(7,985)
|
(8,354)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to common stockholders
|
|
$ (10,716)
|
$ (13,706)
|
|
$ (27,450)
|
$
(42,208)
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
attributable to common stockholders
|
$
(0.31)
|
$
(0.40)
|
|
$
(0.80)
|
$
(1.24)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding - basic and diluted
|
34,492
|
34,184
|
|
34,440
|
33,927
|
Selected Hotel
Operating Statistics
|
(In Actual
Dollars)
|
|
|
(In Constant
Dollars, if different)
|
(In Actual
Dollars)
|
|
|
(In Constant
Dollars, if different)
|
|
|
|
|
Three
Months
|
|
|
Three
Months
|
|
|
Six
Months
|
|
|
Six
Months
|
|
|
|
|
|
Ended June
30,
|
%
|
|
Ended June
30,
|
%
|
|
Ended June
30,
|
%
|
|
Ended June
30,
|
%
|
|
|
|
|
2015
|
2014
|
Change
|
|
2015
|
2014
|
Change
|
|
2015
|
2014
|
Change
|
|
2015
|
2014
|
Change
|
BY
REGION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Northeast
Comparable Hotels (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
92.9%
|
94.0%
|
-1.2%
|
|
|
|
|
|
84.6%
|
87.4%
|
-3.2%
|
|
|
|
|
|
ADR
|
|
|
$ 248.31
|
$ 271.94
|
-8.7%
|
|
|
|
|
|
$ 214.99
|
$ 235.32
|
-8.6%
|
|
|
|
|
|
RevPAR
|
|
|
$ 230.68
|
$ 255.62
|
-9.8%
|
|
|
|
|
|
$ 181.88
|
$ 205.67
|
-11.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Coast
Comparable Hotels (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
91.2%
|
91.0%
|
0.2%
|
|
|
|
|
|
89.6%
|
87.5%
|
2.4%
|
|
|
|
|
|
ADR
|
|
|
$ 278.40
|
$ 272.48
|
2.2%
|
|
|
|
|
|
$ 280.84
|
$ 270.80
|
3.7%
|
|
|
|
|
|
RevPAR
|
|
|
$ 253.90
|
$ 247.96
|
2.4%
|
|
|
|
|
|
$ 251.63
|
$ 236.95
|
6.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miami Comparable
Hotels (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
71.7%
|
73.5%
|
-2.4%
|
|
|
|
|
|
77.5%
|
79.3%
|
-2.3%
|
|
|
|
|
|
ADR
|
|
|
$ 310.30
|
$ 321.05
|
-3.3%
|
|
|
|
|
|
$ 371.92
|
$ 381.13
|
-2.4%
|
|
|
|
|
|
RevPAR
|
|
|
$ 222.49
|
$ 235.97
|
-5.7%
|
|
|
|
|
|
$ 288.24
|
$ 302.24
|
-4.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
Comparable Hotels (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
86.4%
|
87.4%
|
-1.1%
|
|
|
|
|
|
83.8%
|
85.1%
|
-1.5%
|
|
|
|
|
|
ADR
|
|
|
$ 270.76
|
$ 283.92
|
-4.6%
|
|
|
|
|
|
$ 273.68
|
$ 283.26
|
-3.4%
|
|
|
|
|
|
RevPAR
|
|
|
$ 233.94
|
$ 248.15
|
-5.7%
|
|
|
|
|
|
$ 229.34
|
$ 241.05
|
-4.9%
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
International
Comparable Hotels (5)
|
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Occupancy
|
|
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|
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|
|
|
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|
|
|
|
|
|
ADR
|
|
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|
|
|
RevPAR
|
|
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|
|
|
System-wide
Comparable Hotels (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
86.4%
|
87.4%
|
-1.1%
|
|
86.4%
|
87.4%
|
-1.1%
|
|
83.8%
|
85.1%
|
-1.5%
|
|
83.8%
|
85.1%
|
-1.5%
|
|
ADR
|
|
|
$ 270.76
|
$ 283.92
|
-4.6%
|
|
$ 270.76
|
$ 283.92
|
-4.6%
|
|
$ 273.68
|
$ 283.26
|
-3.4%
|
|
$ 273.68
|
$ 283.26
|
-3.4%
|
|
RevPAR
|
|
|
$ 233.94
|
$ 248.15
|
-5.7%
|
|
$ 233.94
|
$ 248.15
|
-5.7%
|
|
$ 229.34
|
$ 241.05
|
-4.9%
|
|
$ 229.34
|
$ 241.05
|
-4.9%
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
(1)
|
Northeast Comparable
Hotels for the periods ended June 30, 2015 and 2014 consist of
Hudson, Morgans and Royalton in New York. Mondrian SoHo,
which effective April 27, 2015 the Company no longer managed, is
non-comparable for the periods presented.
|
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|
|
(2)
|
West Coast Comparable
Hotels for the periods ended June 30, 2015 and 2014 consist of
Mondrian Los Angeles and Clift in San Francisco. Delano Las
Vegas, which opened in September 2014, is non-comparable as this
hotel is subject to a license agreement and managed by affiliates
of MGM Resorts International ("MGM").
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|
(3)
|
Miami Comparable
Hotels for the periods ended June 30, 2015 and 2014 consist of
Delano South Beach, Mondrian South Beach and Shore Club in Miami
Beach, Florida.
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|
|
(4)
|
United States
Comparable Hotels for the periods ended June 30, 2015 and 2014
consist of Hudson, Morgans, Royalton, Mondrian Los Angeles, Clift,
Delano South Beach, Mondrian South Beach and Shore Club.
Delano Las Vegas is non-comparable as this hotel opened in
September 2014 and is subject to a license agreement and managed by
affiliates of MGM. Mondrian SoHo, which effective April 27,
2015 the Company no longer managed, is non-comparable for the
periods presented.
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|
(5)
|
The Company has no
International Comparable Hotels for the periods ended June 30, 2015
and 2014. Sanderson and St Martins Lane in London are
non-comparable, as they both were under major renovation during
2014. Mondrian London, which opened on September 30, 2014, is
also non-comparable. 10 Karaköy, which opened in November
2014 and is subject to a franchise agreement is
non-comparable.
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|
|
(6)
|
System-Wide
Comparable Hotels include all Morgans Hotel Group branded hotels
operated by the Company, except for hotels added or under major
renovation during the current or the prior year, development
projects and discontinued operations. System-Wide Comparable
Hotels for the periods ended June 30, 2015 and 2014 exclude
Sanderson and St Martins Lane in London, which both were under
renovations during 2014, Delano Las Vegas, which opened in
September 2014, is non-comparable as this hotel is subject to a
license agreement and managed by affiliates of MGM, Mondrian
London, which opened on September 30, 2014, 10 Karaköy, which
opened in November 2014 and is subject to a franchise agreement,
and Mondrian SoHo, which effective April 27, 2015, the Company no
longer managed.
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|
|
Selected Hotel
Operating Statistics
|
(In Actual
Dollars)
|
|
|
(In Constant
Dollars, if different)
|
|
(In Actual
Dollars)
|
|
|
(In Constant
Dollars, if different)
|
|
|
|
|
Three
Months
|
|
|
Three
Months
|
|
|
Six
Months
|
|
|
Six
Months
|
|
|
|
|
|
Ended June
30,
|
%
|
|
Ended June
30,
|
%
|
|
Ended June
30,
|
%
|
|
Ended June
30,
|
%
|
|
|
|
|
2015
|
2014
|
Change
|
|
2015
|
2014
|
Change
|
|
2015
|
2014
|
Change
|
|
2015
|
2014
|
Change
|
BY
OWNERSHIP
|
|
|
|
|
|
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
Owned Comparable
Hotels (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
90.8%
|
92.1%
|
-1.4%
|
|
|
|
|
|
85.3%
|
87.3%
|
-2.3%
|
|
|
|
|
|
ADR
|
|
|
$ 259.88
|
$ 275.82
|
-5.8%
|
|
|
|
|
|
$ 254.85
|
$ 265.61
|
-4.1%
|
|
|
|
|
|
RevPAR
|
|
|
$ 235.97
|
$ 254.03
|
-7.1%
|
|
|
|
|
|
$ 217.39
|
$ 231.88
|
-6.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint Venture
Comparable Hotels (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
77.7%
|
75.2%
|
3.3%
|
|
|
|
|
|
81.9%
|
81.8%
|
0.1%
|
|
|
|
|
|
ADR
|
|
|
$ 247.01
|
$ 244.12
|
1.2%
|
|
|
|
|
|
$ 301.15
|
$ 298.63
|
0.8%
|
|
|
|
|
|
RevPAR
|
|
|
$ 191.93
|
$ 183.58
|
4.5%
|
|
|
|
|
|
$ 246.64
|
$ 244.28
|
1.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed Comparable
Hotels (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
81.0%
|
82.1%
|
-1.3%
|
|
|
|
|
|
81.7%
|
82.1%
|
-0.5%
|
|
|
|
|
|
ADR
|
|
|
$ 297.64
|
$ 308.63
|
-3.6%
|
|
|
|
|
|
$ 301.10
|
$ 311.89
|
-3.5%
|
|
|
|
|
|
RevPAR
|
|
|
$ 241.09
|
$ 253.39
|
-4.9%
|
|
|
|
|
|
$ 246.00
|
$ 256.06
|
-3.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System-wide
Comparable Hotels
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
86.4%
|
87.4%
|
-1.1%
|
|
86.4%
|
87.4%
|
-1.1%
|
|
83.8%
|
85.1%
|
-1.5%
|
|
83.8%
|
85.1%
|
-1.5%
|
|
ADR
|
|
|
$ 270.76
|
$ 283.92
|
-4.6%
|
|
$ 270.76
|
$ 283.92
|
-4.6%
|
|
$ 273.68
|
$ 283.26
|
-3.4%
|
|
$ 273.68
|
$ 283.26
|
-3.4%
|
|
RevPAR
|
|
|
$ 233.94
|
$ 248.15
|
-5.7%
|
|
$ 233.94
|
$ 248.15
|
-5.7%
|
|
$ 229.34
|
$ 241.05
|
-4.9%
|
|
$ 229.34
|
$ 241.05
|
-4.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned
Hotels
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hudson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
94.5%
|
94.9%
|
-0.4%
|
|
|
|
|
|
85.8%
|
88.2%
|
-2.7%
|
|
|
|
|
|
ADR
|
|
|
$ 229.47
|
$ 253.02
|
-9.3%
|
|
|
|
|
|
$ 196.22
|
$ 215.39
|
-8.9%
|
|
|
|
|
|
RevPAR
|
|
|
$ 216.85
|
$ 240.12
|
-9.7%
|
|
|
|
|
|
$ 168.36
|
$ 189.97
|
-11.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delano South
Beach
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
69.8%
|
74.0%
|
-5.7%
|
|
|
|
|
|
72.9%
|
79.9%
|
-8.8%
|
|
|
|
|
|
ADR
|
|
|
$ 452.07
|
$ 468.32
|
-3.5%
|
|
|
|
|
|
$ 549.74
|
$ 544.74
|
0.9%
|
|
|
|
|
|
RevPAR
|
|
|
$ 315.54
|
$ 346.56
|
-8.9%
|
|
|
|
|
|
$ 400.76
|
$
435.25
|
-7.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clift
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
92.8%
|
95.1%
|
-2.4%
|
|
|
|
|
|
90.5%
|
89.2%
|
1.5%
|
|
|
|
|
|
ADR
|
|
|
$ 257.54
|
$ 250.67
|
2.7%
|
|
|
|
|
|
$ 262.10
|
$ 250.73
|
4.5%
|
|
|
|
|
|
RevPAR
|
|
|
$ 239.00
|
$ 238.39
|
0.3%
|
|
|
|
|
|
$ 237.20
|
$ 223.65
|
6.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Owned Comparable
Hotels for the periods ended June 30, 2015 and 2014 consist of
Hudson, Delano South Beach, and Clift in San
Francisco.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
Joint Venture
Comparable Hotels for the periods ended June 30, 2015 and 2014
consist of Mondrian South Beach. Mondrian SoHo is
non-comparable for the periods presented as effective March 6,
2015, the Company no longer held any equity interests in the
Mondrian SoHo joint venture.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
Managed Comparable
Hotels for the periods ended June 30, 2015 and 2014 consist of
Morgans, Royalton, Shore Club, and Mondrian Los Angeles.
Managed hotels that are non-comparable for the periods presented
are Sanderson and St Martins Lane in London, which both were under
renovations during 2014, Mondrian London, which opened on September
30, 2014, and Mondrian SoHo, which effective April 27, 2015, the
Company no longer managed.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
The Company believes that EBITDA is a useful financial metric to
assess its operating performance before the impact of investing and
financing transactions and income taxes. It also facilitates
comparison between the Company and its competitors. Given the
significant investments that the Company and its joint ventures
have made in the past in property and equipment, depreciation and
amortization expense comprises a meaningful portion of its cost
structure. The Company believes that EBITDA will provide investors
with a useful tool for assessing the comparability between periods
because it eliminates depreciation and amortization expense
attributable to capital expenditures.
The Company's management has historically used Adjusted EBITDA
when evaluating the operating performance for the entire Company as
well as for individual properties or groups of properties because
it believes the Company's core business model is that of an owner
and operator of hotels, and the inclusion or exclusion of certain
items is necessary to provide the most accurate measure of on-going
core operating results and to evaluate comparative results period
over period. As such, Adjusted EBITDA excludes other
non-operating expense (income) that does not relate to the on-going
performance of the Company's assets. The Company excludes the
following items from EBITDA to arrive at Adjusted EBITDA:
- Other non-operating expenses, such as costs, associated with
discontinued operations and previously owned hotels, both
consolidated and unconsolidated, transaction costs related to
business acquisitions, changes in the fair value of debt and equity
instruments, miscellaneous litigation and settlement costs and
other expenses that relate to the financing and investing
activities of the Company;
- Restructuring and disposal costs, which include expenses
incurred related to the Company's corporate restructuring
initiatives, such as professional fees, litigation and settlement
costs, executive terminations and severance costs related to such
restructuring initiatives, including the March 2014 corporate office termination plan and
proxy contests, and gains or losses on asset disposals as part of
major renovation projects or restructuring;
- Development costs, including transaction costs related to the
acquisition or termination of projects, internal development
payroll and other costs and pre-opening expenses incurred related
to new concepts at existing hotel and the development of new
hotels, and the write-off of abandoned development projects
previously capitalized;
- Impairment losses on development projects and unconsolidated
joint ventures. The Company may incur additional non-cash
impairment charges related to assets under development,
wholly-owned assets, or its investments in joint ventures,
including impairment related to uncollectible receivables from
development projects and unconsolidated joint ventures. The
Company believes these adjustments are necessary to provide the
most accurate measure of core operating results as a means to
evaluate comparative results;
- EBITDA related to hotels and food and beverage entities
reported as discontinued operations to more accurately reflect the
operating performance of assets in which the Company expects to
have an ongoing direct or indirect ownership interest;
- Stock-based compensation expense, as this is not necessarily an
indication of the operating performance of the Company's assets;
and
- Gains recognized on asset sales, as the Company believes that
including them in Adjusted EBITDA is not consistent with reflecting
the ongoing performance of its assets. In addition, the
Company believes material gains or losses from the net book value
of disposed assets is not particularly meaningful given that the
depreciated asset value on which the gains are calculated often
does not reflect market value of the assets.
The Company also makes an adjustment to EBITDA for hotels in
which its percentage ownership interest has changed to facilitate
period-over-period comparisons and to more accurately reflect the
operating performance of assets based on its actual
ownership. In this respect, the Company's method of
calculating Adjusted EBITDA may change from prior periods, and
calculations of Adjusted EBITDA could continue to vary from quarter
to quarter to reflect changing ownership interests.
The Company believes Adjusted EBITDA provides management and its
investors with a more accurate financial metric by which to
evaluate its performance as it eliminates the impact of costs
incurred related to investing and financing transactions.
Internally, the Company's management utilizes Adjusted EBITDA to
measure the performance of its core on-going operations and is used
extensively during its annual budgeting process. Management
also uses Adjusted EBITDA as a measure in determining the value of
acquisitions, expansion opportunities, and dispositions and
borrowing capacity, and evaluating executive inventive
compensation. Adjusted EBITDA is a key metric which
management evaluates prior to execution of any strategic investing
or financing opportunity.
The Company has historically reported Adjusted EBITDA to its
investors and believes that this continued inclusion of Adjusted
EBITDA provides consistency in its financial reporting and enables
investors to perform more meaningful comparisons of past, present
and future operating results and to evaluate the results of its
core on-going operations.
The use of EBITDA and Adjusted EBITDA has certain limitations.
The Company's presentation of EBITDA and Adjusted EBITDA may be
different from the presentation used by other companies and
therefore comparability may be limited. Depreciation expense for
various long-term assets, interest expense, income taxes and other
items have been and will be incurred and are not reflected in the
presentation of EBITDA or Adjusted EBITDA. Each of these items
should also be considered in the overall evaluation of the
Company's results. Additionally, EBITDA and Adjusted EBITDA do not
reflect capital expenditures and other investing activities and
should not be considered as a measure of the Company's liquidity.
The Company compensates for these limitations by providing the
relevant disclosure of its depreciation, interest and income tax
expense, capital expenditures and other items in its
reconciliations to its financial measures under U.S. GAAP and/or in
its consolidated financial statements, all of which should be
considered when evaluating its performance. The term EBITDA is not
defined under U.S. GAAP and EBITDA is not a measure of net income,
operating income, operating performance or liquidity presented in
accordance with U.S. GAAP. In addition, EBITDA is impacted by
reorganization of businesses and other restructuring-related
charges. When assessing the Company's operating performance, you
should not consider this data in isolation, or as a substitute for
the Company's net income, operating income or any other operating
performance measure that is calculated in accordance with U.S.
GAAP.
A reconciliation of net loss, the most directly comparable U.S.
GAAP measure, to EBITDA and Adjusted EBITDA for each of the
respective periods indicated is as follows:
EBITDA
Reconciliation
|
|
|
|
|
|
|
(In
thousands)
|
|
|
|
Three
Months
|
|
Six
Months
|
|
|
|
|
|
|
Ended June
30,
|
|
Ended June
30,
|
|
|
|
|
|
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to Morgans Hotel Group Co.
|
$
(6,641)
|
$
(9,719)
|
|
$
(19,465)
|
$
(33,854)
|
Interest expense,
net
|
|
|
11,955
|
12,935
|
|
23,782
|
28,933
|
Income tax
expense
|
|
|
169
|
66
|
|
295
|
229
|
Depreciation and
amortization expense
|
5,563
|
6,681
|
|
11,200
|
15,083
|
Proportionate share
of interest expense from
unconsolidated joint ventures
|
|
|
|
|
|
381
|
1,143
|
|
1,110
|
2,288
|
Proportionate share
of depreciation expense from
unconsolidated joint ventures
|
|
|
|
|
|
117
|
534
|
|
488
|
925
|
Net income
attributable to noncontrolling interest
|
|
(13)
|
(20)
|
|
(41)
|
(73)
|
Proportionate share
of loss from unconsolidated joint ventures not recorded due to negative investment
balances
|
|
|
|
|
|
(1,050)
|
(1,340)
|
|
(1,912)
|
(2,799)
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
|
|
|
10,481
|
10,280
|
|
15,457
|
10,732
|
|
|
|
|
|
|
|
|
|
|
|
Other non operating
expenses
|
1,552
|
430
|
|
3,207
|
1,126
|
Other non operating
expense from unconsolidated joint ventures
|
|
|
|
|
|
|
|
472
|
602
|
|
879
|
1,218
|
Restructuring and
disposal costs
|
|
|
593
|
3,981
|
|
2,542
|
11,224
|
Development
costs
|
|
|
457
|
2,666
|
|
605
|
3,364
|
Impairment loss on
development project and unconsolidated joint
venture
|
550
|
-
|
|
4,442
|
-
|
Stock based
compensation expense
|
|
578
|
804
|
|
922
|
2,748
|
Gain on asset
sales
|
|
|
(2,086)
|
(2,005)
|
|
(5,794)
|
(4,010)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
$
12,597
|
$
16,758
|
|
$
22,260
|
$
26,402
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA,
Excluding The Light Group
|
|
$
12,512
|
$
14,379
|
|
$
22,175
|
$
22,142
|
Hotel EBITDA
Analysis (1)
|
|
|
|
|
|
|
|
(In thousands,
except percentages)
|
|
|
|
|
|
|
|
|
|
|
Three
Months
|
|
|
Six
Months
|
|
|
|
|
|
Ended June
30,
|
%
|
|
Ended June
30,
|
%
|
|
|
|
|
2015
|
2014
|
Change
|
|
2015
|
2014
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
Hudson
|
|
|
|
$ 6,706
|
$ 8,218
|
-18%
|
|
$ 5,598
|
$ 7,360
|
-24%
|
Delano South
Beach
|
|
3,872
|
4,261
|
-9%
|
|
12,045
|
12,211
|
-1%
|
Clift
|
|
|
|
2,270
|
1,981
|
15%
|
|
4,755
|
3,426
|
39%
|
|
Owned Comparable
Hotels (2)
|
12,848
|
14,460
|
-11%
|
|
22,398
|
22,997
|
-3%
|
|
|
|
|
|
|
|
|
|
|
|
Mondrian South Beach
- Joint Venture
|
(78)
|
18
|
-533%
|
|
457
|
492
|
-7%
|
Mondrian SoHo
(3)
|
|
|
-
|
925
|
-100%
|
|
112
|
1,145
|
-90%
|
Las Vegas restaurant
leases (4)
|
|
662
|
995
|
-33%
|
|
1,817
|
2,259
|
-20%
|
|
Other Hotel and
F&B EBITDA
|
584
|
1,938
|
130%
|
|
2,386
|
3,896
|
161%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Hotel and
F&B EBITDA
|
$ 13,432
|
$ 16,398
|
-18%
|
|
$ 24,784
|
$ 26,893
|
-8%
|
|
|
|
|
|
|
|
|
|
(1) For joint
venture hotel, represents the Company's share of the respective
hotels' EBITDA, after management fees.
|
|
|
|
|
|
|
|
|
|
|
(2) Reflects
the Company's comparable owned hotels.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Effective
March 6, 2015, the Company no longer holds any equity ownership in
Mondrian SoHo, and effective April 27, 2015, the Company no longer
managed this hotel. For 2015, EBITDA reflects the Company's
share of Mondrian SoHo's EBITDA, after management fees, for the
period from January 1, 2015 through March 5,
2015.
|
|
|
|
|
|
|
|
|
|
(4) Reflects EBITDA
from the leasehold interests in three food and beverage venues at
Mandalay Bay in Las Vegas which the Company acquired in August
2012.
|
|
|
|
|
|
|
|
|
|
Owned Hotel Room
Revenue Analysis
|
|
|
|
|
|
|
|
(In thousands,
except percentages)
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
|
|
|
Six
Months
|
|
|
|
|
|
Ended June
30,
|
%
|
|
Ended June
30,
|
%
|
|
|
|
|
2015
|
2014
|
Change
|
|
2015
|
2014
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
Hudson
|
|
|
|
$ 17,331
|
$ 18,931
|
-8%
|
|
$ 26,745
|
$ 29,767
|
-10%
|
Delano South
Beach
|
|
|
5,574
|
6,120
|
-9%
|
|
14,074
|
15,288
|
-8%
|
Clift
|
|
|
|
8,086
|
8,067
|
0%
|
|
15,968
|
15,057
|
6%
|
|
Total Owned
Hotels
|
$
30,991
|
$
33,118
|
-6%
|
|
$
56,787
|
$
60,112
|
-6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned Hotel
Revenue Analysis
|
Three
Months
|
|
|
Six
Months
|
|
(In thousands,
except percentages)
|
Ended June
30,
|
%
|
|
Ended June
30,
|
%
|
|
|
|
|
2015
|
2014
|
Change
|
|
2015
|
2014
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
Hudson
|
|
|
|
$ 22,857
|
$ 24,365
|
-6%
|
|
$ 36,295
|
$ 38,926
|
-7%
|
Delano South
Beach
|
|
|
10,841
|
11,131
|
-3%
|
|
27,025
|
27,743
|
-3%
|
Clift
|
|
|
|
10,769
|
11,030
|
-2%
|
|
21,931
|
21,363
|
3%
|
|
Total Owned
Hotels
|
$
44,467
|
$
46,526
|
-4%
|
|
$
85,251
|
$
88,032
|
-3%
|
Balance
Sheets
|
|
|
|
(In
thousands)
|
|
|
|
|
June
30,
|
|
December
31,
|
|
2015
|
|
2014
|
|
|
|
|
ASSETS:
|
|
|
|
Property and
equipment, net
|
$ 269,949
|
|
$
277,825
|
Goodwill
|
54,057
|
|
54,057
|
Investments in and
advances to unconsolidated joint ventures
|
6,600
|
|
10,492
|
Assets held for
sale
|
-
|
|
34,284
|
Cash and cash
equivalents
|
32,994
|
|
13,493
|
Restricted
cash
|
13,391
|
|
13,939
|
Accounts receivable,
net
|
9,470
|
|
10,475
|
Related party
receivables
|
2,735
|
|
3,560
|
Prepaid expenses and
other assets
|
10,822
|
|
8,493
|
Deferred tax asset,
net
|
77,592
|
|
77,204
|
Other assets,
net
|
42,940
|
|
47,422
|
Total
assets
|
$
520,550
|
|
$
551,244
|
|
|
|
|
LIABILITIES and
STOCKHOLDERS' DEFICIT:
|
|
|
|
Debt and capital
lease obligations, net
|
$ 606,052
|
|
$
605,743
|
Accounts payable and
accrued liabilities
|
31,076
|
|
32,524
|
Accounts payable and
accrued liabilities of assets held for sale
|
-
|
|
1,128
|
Deferred gain on
asset sales
|
121,388
|
|
125,398
|
Other
liabilities
|
13,866
|
|
13,866
|
Total
liabilities
|
772,382
|
|
778,659
|
|
|
|
|
Redeemable
noncontrolling interest
|
-
|
|
5,042
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Total Morgans Hotel
Group Co. stockholders' deficit
|
(252,340)
|
|
(233,006)
|
Noncontrolling
interest
|
508
|
|
549
|
Total
deficit
|
(251,832)
|
|
(232,457)
|
|
|
|
|
Total liabilities,
redeemable noncontrolling interest and stockholders'
deficit
|
$
520,550
|
|
$
551,244
|
Contacts:
Investors
Richard Szymanski
Morgans Hotel Group Co.
212.277.4188
Media
Daniel Gagnier/
Nathaniel Garnick
Sard Verbinnen & Co
212.687.8080
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/morgans-hotel-group-reports-second-quarter-2015-results-300123786.html
SOURCE Morgans Hotel Group Co.